Record numbers of people will pay extra unless they qualify for Covid-19 hardship exemptions.
A record 1.8 million taxpayers missed the January deadline to file their returns and face penalties including 2.6% interest on the money owed.
More than 10.7 million people submitted their 2019-20 self-assessment tax returns by the 31 January deadline, HM Revenue and Customs (HMRC) has revealed.
Under a special Covid-19 exemption the remaining 1.8 million whose tax return is now late will not be charged a late filing penalty, provided they submit their return online by 28 February.
But those who did not pay their self-assessment tax bill by 31 January are now incurring interest on the outstanding balance. HMRC cautioned they should pay their bill as soon as possible.
Taxpayers who do not pay any outstanding balance, or arrange a payment plan, before 3 March 2021 will be charged a 5% late payment penalty.
Those who are not yet able to file their tax return should pay an estimated amount as soon as possible, HMRC advised. This will reduce any interest and late payment penalty.
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Self-employed people can use the calculator on GOV.UK to help estimate their tax bill.
Karl Khan, HMRC’s interim director general for customer services, said: “We know many individuals and small businesses are finding it harder to pay this year, due to the pandemic.
“Anyone who can’t afford to pay their tax bill in full can set up a payment plan, once they’ve filed their return, to spread their tax bill into monthly instalments.”
There are several ways to pay a self-assessment tax bill or an estimated amount; online, via a bank, or by post.
Anyone who cannot pay their bill in full can apply to spread the cost. Taxpayers can set up a payment plan, in up to 12 monthly instalments, online via GOV.UK. But they must have no outstanding tax returns, other tax debts or other HMRC payment plans set up.
Interest accrues on all outstanding balances, including those in payment plans.
Myron Jobson, personal finance campaigner at interactive investor, says: “Common sense appears to have prevailed here. However, if you can, act as if a penalty still applies and get it done and dusted.
“Finally, if you want an easier job next year, remember to make the most out of your tax-free allowances so there’s less to fill in.”
Self-assessment taxpayers who need to make payments on account, and who know their 2020-21 tax bill is going to be lower than in 2019-20 – for example due to loss of earnings because of Covid-19, can lower the amount they are required to pay.
HMRC has also warned taxpayers to be aware of copycat HMRC websites and phishing scams. Only the GOV.UK website has the correct link to file self-assessment tax returns online, which is free of charge.
HMRC also will not call, email or text about financial help, tax refunds or owed tax. These will be scams.
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